Intangible assets Flashcards
1
Q
What classifies an intangible asset?
A
- controlled by the company
- as a result of past events
- future economic benefits (cash) probable/expectation of future economic benefits
- identifiable
- can be measured reliably
2
Q
What does it mean by identifiable?
A
- separable - can be sold without selling the whole business or
- legal rights over asset
3
Q
How can an intangible asset be measured reliably?
A
- cost
- fair value - price asset could be sold for
- present value of future cash flows
4
Q
What does IAS 38 say about the capitalisation of an IA asset?
A
- cost of asset purchased from external party
- costs directly attributable to bringing the asset into working use (costs to obtain and make it work)
- development costs (costs of internally developing a new IA)
5
Q
What can be included as costs directly attributable?
A
- interest costs on loans used to develop asset
- depreciation on PPE used to develop asset
6
Q
What are the conditions for development costs to be capitalised?
(in OB)
A
- future economic benefits probable
- technically feasible to complete IA
- intention to complete IA
- ability to use or sell IA
- can be measured reliably
7
Q
What is expensed to the P&L?
A
- costs not meeting the asset definition
- costs not directly attributable to bringing the asset into working useW
8
Q
What counts as costs not meeting the asset defintion?
A
- research costs because future economic benefits are not probable
- internally developed goodwill, brands and customer lists cannot be measured reliably
9
Q
What is the cost model?
A
- asset amortised over UEL when it is ready for use
- UEL - legal right to use - expected sales period - technological change
- amortisation method reviewed annually
- assets with indefinite UEL tested annually for impairment
10
Q
What is the revaluation model?
A
- can only use if active market for the asset so cannot apply to most IA as most are unique
- residual value is usually zero for the same reason
